I got this error when installing TFS 2008. In the error log I could see the problem was when the TfsGssInit.exe was run, it said
Detailed Message: TF213000: A required user account could not be added during installation or repair of Team Foundation Server. The installation or repair failed with the following exception message: System.TypeInitializationException…..
I found the answer in the TFS forum. The thread (and others) did suggest there were DNS lookup issues, but the thing that got it for me was removing VS2008 Team Client (and it’s SP1) from the server. I had installed these whilst I had been waiting for the IT department do some work in the SQL Data Tier. I thought I was saving times, I was wrong!.
I think the issue was the VS2008 SP1, but I removed both and the install of TFS worked OK.